Webster: Brexit won’t be detrimental to global growth

PROVIDENCE – Webster Private Bank, from a purely economic point of view, estimates that Brexit – that is, last week’s British exit from the European Union – will not have a significant impact on global growth.
In its “market insights,” commentary published periodically by Connecticut-based Webster Bank, the financial institution estimates the long-term political consequences are “more worrying,” than those related to the economy, as there will be two years of negotiations to figure out the divorce and agreement on new trade relationships.
“Brexit is a blow to institutions and the so-called political and economic elites,” according to the commentary. “It is a clear sign of rising populism, nationalism and anti-globalization mood among voters, which is not only a U.K. phenomenon. As we have argued, these feelings are also what has propelled Donald Trump during the Republican primaries and helped Bernie Sanders be such a challenge for Hillary Clinton.”
Webster expects investors to increasingly focus on populism in coming months with the potential of a Trump presidency and from the potential support for other so-called “LEAVE” referendums among other European countries.
A bear market, according to the commentary, would only become a major concern if there’s indicators suggesting the U.S. global economies are heading toward a recession and the bank doesn’t believe the Brexit vote will lead to such an outcome.
“In summary, the Brexit vote is not the disaster or the Armageddon that some fear it is, but it will lead to ongoing uncertainties in coming months,” according to the commentary. “We recommend investors to avoid panicking when everyone is running for the exit and become more tactical in how they approach their investments, i.e., selling on strength and buying on weakness. Volatility is definitely here to stay.”

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